Future Business Leaders of America (FBLA) Accounting Practice Test

What are journal entries recorded at the end of a fiscal period to update accounts called?

1. Adjusting entries

2. Closing entries

3. Final entries

4. Reconciliation entries

The correct answer is: Adjusting entries

The term for journal entries recorded at the end of a fiscal period to update accounts is "adjusting entries." These entries are crucial for ensuring that the financial statements accurately reflect the company's financial position and performance for that period. Adjusting entries typically include necessary adjustments for accrued revenues, accrued expenses, deferred revenues, and deferred expenses. By making these adjustments, businesses can align their income and expenses with the correct accounting period, adhering to the matching principle in accounting. This principle states that revenues and expenses should be recognized in the period in which they occur, providing a more realistic view of earnings. Other entries, such as closing entries, are made at the end of an accounting period to transfer balances from temporary accounts (like revenues and expenses) to permanent accounts (like retained earnings) to prepare the accounts for the next period. Final entries and reconciliation entries are not standard terms used to describe adjusting entries, making them less applicable in this context.